Archive for the ‘Syria’ Category


Nov

18

Friday Grab Bag


Posted by at 4:41 pm on November 18, 2016
Category: BISIran SanctionsOFACSyria

Grab BagHere are a few recent developments that you may have missed:

  • The House voted yesterday to nullify the impact of a license granted by the Office of Foreign Assets Control (“OFAC”) in September which would allow Boeing to sell civil aircraft to Iran.
  • On Tuesday the House passed a bill to extend the Iran Sanctions Act for another 10 years. The bill, weighing in at around 50 words, makes no changes to the Act beyond extending its expiration date.
  • The Caesar Syria Civilian Protection Act of 2016 was passed by the House on Wednesday. Named after the alias of a military photographer who has taken pictures of the conflict in Syria, the act would require blocking of foreign persons, including presumably the Russians, who provide “significant” support to the Government of Syria or the Central Bank of Syria. It will be interesting to see how this plays out if the new Administration carries out its apparent desire to cooperate with Russia in Syria. Although Russia is fighting ISIS there, it is also supporting the current Syrian regime of Bashar al-Assad.
  • The temporary general license granted by the Bureau of Industry and Security (“BIS”) to permit exports to ZTE notwithstanding its inclusion on the Entity Listwas extended by BIS today until February 27, 2017. ZTE was put on the Entity List after it diverted U.S.-origin goods to Iran.
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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Aug

17

This Post About Kim Kardashian Will Leave You Utterly Speechless


Posted by at 10:19 pm on August 17, 2016
Category: SECSyria

Homs Syria by Bo yaser (Own work) [CC BY-SA 3.0], via Wikimedia Commons https://commons.wikimedia.org/wiki/File%3ADestruction_in_Homs_(2).jpg [cropped and processed]

According to this article, the Securities and Exchange Commission is sending out inquiries to certain publicly traded technology companies to ask them whether they are involved in any illegal exports to Syria. Among the subjects of concern by the SEC is a company named Glu Mobile, the perpetrator of a mobile phone game called, and I’m not kidding here, “Kim Kardashian: Hollywood.” This game allows you to “create your own star and customize your look with hundreds of style options … [and] join Kim Kardashian on a red carpet adventure.” Apparently, civilization as we know it will crumble into dust if people in Syria can play this game on their phones. (Frankly, we’d probably be better off if this game could ONLY be played in Syria, but that’s another issue.)

Glu pointed out to the geniuses at the SEC, who apparently can’t figure out how mobile phones work, that mobile games are sold through the iTunes, Amazon and Android stores and that these stores don’t permit sales to Syria. One can only imagine that the folks at the SEC must have been under the impression that mobile games were distributed on floppy disks sent through the mails.

Photo Credit: By Bo yaser (Own work) [CC BY-SA 3.0], via Wikimedia Commons [cropped and processed].

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

May

17

Unintended Consequences of Sanctions Intensify Syrian Refugee Crisis


Posted by at 8:25 am on May 17, 2016
Category: OFACSyria

Syrian Refugees by Oğuzhan Ali [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/xj5B1W [color processed]

Last week I wrote about one of the unintended consequences of OFAC’s “scorched earth” enforcement policy against banks and payment processors, namely, the blocking of funds transfers where the memo or the transferee name contains a naughty word like “Cuba” or “Isis” (you know, the name of Count Grantham’s dog on Dontown Abbey). But this excellent article published by Bloomberg News suggests that there are more serious unintended consequences, namely, the potential exacerbation of the Syrian refugee crisis.

According to the article, banks are refusing to permit transfers of funds for humanitarian relief to Syria even where such transfers may be completely legal. The article cites an effort by Christian Aid, a UK charity, to transfer funds to Syria to feed people displaced by the continuing fighting. Its bank declined to transfer the funds. Such refusals, according to sources cited by the article, are a result of banks making a “rational decision” to avoid any risk of penalties, particularly where the profits to be made from a particular funds transfer might be negligible.

“The unintended consequence here is that aid is being denied to people in desperate need of assistance,” said Guy [head of Christian Aid and] a former U.K. ambassador to Yemen and Lebanon. “If this continues, it is possible to see a situation where those people who are often in most need of humanitarian aid are least able to access it.” … But such de-risking threatens to undermine the West’s push to stem the flow of migrants heading toward Europe from the embattled Middle East, according to Christian Aid’s Guy

Of course, this situation is further complicated by OFAC’s refusal to permit humanitarian funds transfers to Syria except those made, pursuant to section 542.513, by United Nations organizations or its contractors, unlike say the broader provisions relating to humanitarian activities in Sudan. Even then, the general license prohibits any blocked entity from touching the funds, setting up the compliance nightmare for the banks involved and their understandable refusal to risk yet another mega-fine from OFAC.

Photo Credit: Syrian Refugees by Oğuzhan Ali [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Flickr https://flic.kr/p/xj5B1W [color processed]

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Copyright © 2016 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)

Apr

16

Thursday Grab Bag


Posted by at 8:05 am on April 16, 2015
Category: Crimea SanctionsCriminal PenaltiesCuba SanctionsIran SanctionsOFACSudanSyria

Grab BagHere are a few recent developments that you may have missed:

  • Last month we criticized the Department of Justice for conspiring with foreign luxury car makers to jail U.S. citizens who exported luxury cars to China to arbitrage the difference between U.S. and Chinese prices for these vehicles. Apparently, the DoJ now is having second thoughts about wasting taxpayer money and its resources on this nonsense. According to the  New York Times, settlements have recently been reached in nine states where prosecutors have agreed to return seized cars to, and drop charges against, luxury car exporters. Good.
  • On Monday we reported that Obama was going to drop Cuba from the list of state sponsors of terrorism, a move we thought was largely symbolic. Yesterday he did just that, and provided the 45-day notice required under the three acts that provide the basis for the list: § 6(j)(4)(A)(i)-(iii) of the Export Administration Act of 1979; § 40(f)(1)(A)(i)-(iii) of the Arms Export Control Act; and § 620A(c)(1)(A)-(C) of the Foreign Assistance Act of 1961. The linked New York Times article wrongly states that Congress can block this action with a joint resolution. Only the Arms Export Control Act provides for this blocking mechanism, and, as we noted, there’s no way that the White House will remove Cuba from the current arms embargo. So a joint resolution under the AECA would be, like the removal itself, largely symbolic
  • The Office of Foreign Assets Control (“OFAC”) revised its rules on Monday to amend the Syrian Sanctions Regulations to permit certain activities with respect to written publications, including the ability to pay advances and royalties, to substantively edit manuscripts and to create marketing campaigns. These activities have been permitted for Cuba, Sudan and Iran since 2004. Don’t try this yet in Crimea which remains, bizarrely and incomprehensibly, the most heavily sanctioned place on the face of the planet
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Copyright © 2015 Clif Burns. All Rights Reserved.
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Oct

7

De Minimis Rule? What De Minimis Rule?


Posted by at 10:40 pm on October 7, 2014
Category: BISCriminal PenaltiesSyria

Robbins & Myers Belgium HQ via Google Maps http://goo.gl/P9oIwo [Fair Use]
ABOVE: Robbins & Meyers Belgium


Robbins & Myers Belgium, a Belgian subsidiary of Robbins & Myers, Inc., which was recently acquired by National Oilwell Varco, pleaded guilty last week to charges that it violated U.S. sanctions on Syria when it exported stators that it manufactured in Belgium to Syria. According to the Bureau of Industry and Security (“BIS”) press release, the Belgian company was charged with violating U.S. criminal law because of the following:

The guilty plea stemmed from actions by Robbins & Myers Belgium that, in 2006, caused four illegal exports, reexports and/or transshipments of stators—important components of oil extraction equipment—that had made [sic] from steel that had been milled in the United States to a customer operating oil fields in Syria.

Say what? Is it really criminal for a foreign company to export an item just because it has some U.S. content in it? What happened to the de minimis rule? How hard would it be to say that the item consisted of more than 10 percent U.S.-origin steel to avoid suggesting that the export was illegal if there was any U.S. content?  Even though BIS used up three paragraphs in the press release patting itself on the back, it could not manage to add a sentence somewhere, anywhere, to correct this misstatement of the law?

The factual proffer that served as a basis for the guilty plea, which is supposed to contain facts sufficient to support the plea, is no better on this issue.

At all times pertinent to this case, the stators shipped by RMB to Company A in Syria were made from steel tube that Company B had milled in the United States.

Nope, being “made from steel tube … milled in the United States” is not enough to support the plea. Section 746.9(a) of the BIS rules forbids exports to Syria of items “subject to the EAR.” And section 734.3(c)(1), otherwise known as the de minimis rule, states that foreign-made items destined for Syria are not “subject to the EAR” if they contain “controlled U.S.-origin commodities … valued at 10% or less of the total value of the foreign-made commodity.” Although the rule is not clear, BIS takes the position that “controlled” here means “controlled for Syria” under section 746.9 and therefore includes any EAR99 item other than food or medicine.  Under that reading the EAR99 steel tubes would be controlled U.S.-origin commodities for purposes of the de minimis rule. We just don’t know if the tubes were more than 10 percent of the value of the foreign-made stators. And we don’t know this because the supposedly completely proffer leaves out this crucial element of the crime.

I do not doubt that in fact the U.S.-origin content here was in excess of de minimis as required by the rule for foreign-made products. My point is, however, that the BIS press release and the proffer incorrectly and misleadingly state that a criminal violation occurred because the stators contained any amount of U.S. origin goods. That is simply not a correct statement of the law, and those charged with enforcing the law should also correctly state it.

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Copyright © 2014 Clif Burns. All Rights Reserved.
(No republication, syndication or use permitted without my consent.)